With 13% annual earnings growth forecast and 45% under ‘fair value’, should I buy more of this FTSE giant now?

AstraZeneca (LSE: AZN) remains one of the FTSE’s most structurally reliable long-term value creators, in my view.

Its robust, cash‑generative earnings, strong research and development output, and broad and deep product pipeline all underpin this strength.

Yet the sum of these factors appear to be inadequately reflected in the current share price.

So, where should the stock be trading, according to my valuation modelling?

One risk removed and growth ahead?

One factor I believe has kept the stock price in check is uncertainty about the UK listing. Several news outlets reported last year that CEO Pascal Soriot discussed moving AstraZeneca’s primary listing to the US.

This would have required UK investors to hold US-listed shares and deal with dollar-denominated trading, tax considerations, and currency exposure. The idea now appears to have been shelved, but the episode clearly unsettled investors — myself included.

One risk still in play is failure in any of its multiple drug development pipeline. These programmes are extremely expensive in terms of time and money.

Nevertheless, the consensus forecast of analysts is that AstraZeneca’s earnings will grow by an average 13% a year to end-2028. And it is this that ultimately powers any firm’s share price over time.

That momentum looks firmly underpinned to me by its strengthening oncology franchise, with multiple late-stage assets carrying clear blockbuster potential. It is also supported by accelerating R&D progress driven by recent AI-focused acquisitions.

Do recent results back this up?

AstraZeneca’s latest numbers — first nine months (9M) and Q3 of 2025 — saw 9M revenue rise 10% year on year to $43.2bn. This was driven by growth across all divisions, including 16% in oncology. Meanwhile, earnings per share (EPS) jumped 43% to $5.10.

Momentum strengthened further in Q3, with revenue up 12% to $15.2bn, ahead of analysts’ expectations of $14.79bn. EPS soared 77% to $1.64.

The company also highlighted 16 positive Phase III readouts and 31 regulatory approvals, underscoring the depth of its late-stage pipeline. These readouts are the final testing stage for a new drug before it goes for final regulatory approval.

At the same time, management reiterated its target to deliver $80bn of revenue by 2030, up from $54.073bn in 2024.

How big a bargain is the stock?

A discounted cash flow (DCF) analysis identifies where a stock should trade by projecting future cash flows and discounting them back to today. This reflects the consensus earnings growth forecasts of analysts.

Different DCF models produce different outcomes depending on the assumptions used. However, based on my DCF assumptions, including a 7.1% discount rate, AstraZeneca shares are 45% undervalued at their current £140.30 price. That implies a fair value of roughly £255.09.

And because asset prices can gravitate towards their fair value over time, the modelling points me to a compelling long-term buying opportunity if these assumptions hold.

My investment view

AstraZeneca’s resilient growth, deep pipeline and clear undervaluation leave me optimistic about its long‑term prospects.

I plan to increase my own holding very soon, as the investment case continues to strengthen.

I believe the stock also deserves attention from investors willing to look past any short-term noise and focus on fundamentals.

The post With 13% annual earnings growth forecast and 45% under ‘fair value’, should I buy more of this FTSE giant now? appeared first on The Motley Fool UK.

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Simon Watkins has positions in AstraZeneca Plc. The Motley Fool UK has recommended AstraZeneca Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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